JRC technical work supporting Commission second level legislation on risk based contributions to the (single) resolution fund

JRC supported the DG MARKT by developing quantitative analyses for the preparation of the second level legislation on bank contributions to be paid to the EU national Resolution Funds and to the Single Resolution Fund SRF for countries participating to the Banking Union. The present report summarizes all the extensive analyses on the calculation of banks contributions supporting the whole policy process. All analyses were based on a dataset that JRC built assembling individual bank unconsolidated balance sheet data, provided directly by the MS. JRC developed the technical details to measure the risk profile of each bank. Starting from a selection of balance sheet indicators, which account for the different aspects of each bank activity, the methodology aggregates them into a single composite risk indicator. The risk indicator is then combined with the bank size measure to compute the share of aggregated contribution each bank joining the fund would pay. JRC also investigated the decrease in contributions of applying a special treatment for the computation of the small banks' contributions: these banks will not pay contributions based on their risk profile but will be instead lump-sum contributions, depending on their size only. JRC assessed the sensitivity of the distribution of contributions when changing some elements of the overall mechanism used to measure risk and compute contributions. Finally, following the discussion at the political level, JRC also assessed some technical issues related to the calculation of the contribution base and it tested the impact on banks contributions of different options for the phasing in of the single resolution fund.